Opinion
No. 873 C.D. 2012
12-07-2012
Productions Plus, Inc., Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
Productions Plus, Inc. (Employer) petitions for review of an order of the Unemployment Compensation Board of Review (Board) affirming the Referee's decision finding Cara K. Cheeley (Claimant) eligible to continue to receive benefits under Sections 402(h) and 4(l)(2)(B) of the Unemployment Compensation Law (Law) because she was not customarily engaged in an independently established trade or business. For the reasons that follow, we affirm the Board.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §§802(h) and 753(l)(2)(B). Section 802(h) of the Law provides that "[a]n employe shall be ineligible for compensation for any week...[i]n which he is engaged in self-employment." Section 753(l)(2)(B) provides, in relevant part:
Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that--(a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business.
In April 2011, Claimant applied for and began receiving unemployment compensation benefits after a loss of full-time employment. In July 2011, Claimant accepted a three-day assignment working as a product specialist for Employer, a talent agency, at a rate of $200 per day. On September 1, 2011, the UC Service Center, finding that Claimant was not self-employed because she was not free from direction or control in the performance of her job, found she was not ineligible for benefits under Section 402(h) of the Law. Employer appealed and a hearing was held at which both Claimant and Employer provided testimony.
Before the Referee, Sal Caruso (Caruso), Employer's Executive Vice President and CFO, explained that Employer maintains a database of individuals who perform modeling services and provides referrals to clients seeking such individuals to work at various events. He testified that after Claimant responded to an advertisement for the product specialist position, Employer relayed that information to a marketing firm, Apex Performance (Apex), which expressed an interest in Claimant working at a particular event. He stated that Employer then asked Claimant if she wanted to work at the event, and that Claimant had the right to accept or reject the offer of employment at that point. He also introduced Employer's independent contractor agreement with Claimant, which provided that Claimant was free to perform services for entities other than Employer's clients. Caruso further testified that Claimant was not supervised by Employer during her assignment; that Employer's client, not Employer, determined Claimant's rate of pay as well as the clothing and behavioral requirements for her assignment; that Employer did not have the authority to remove Claimant from the assignment; that Employer did not provide any training, instructions or guidelines to Claimant prior to the assignment; and that Employer offered no benefits to Claimant. He further explained that Employer did not withhold taxes from Claimant and that it would issue a Form 1099 to Claimant in January 2012. Finally, Caruso stated that although Claimant remained in Employer's database after the event, Employer did not offer Claimant any further assignments.
Claimant testified that she responded to Employer's advertisement on Craigslist for a product specialist after losing her previous full-time job. She explained, "I was just looking for some work to get through between - I was out of work from my previous job. I was looking for something to fill in. When I saw this job I was hoping it would lead to a full-time position." (October 24, 2011 Hearing Transcript at 16). Claimant testified that she first became affiliated with Employer on July 15, 2011, and subsequently accepted an assignment from Employer to work for three days in July 2011 as a product specialist for Employer's client, Suzuki, at the Pittsburgh Vintage Grand Prix (event) at a rate of $200 per day. She testified that Gina Wigman (Wigman), an account manager for Employer, sent her all the information regarding the event, including the hours she would be working, her pay rate and all training materials. She further testified that Wigman set her hours for the three days she worked. Claimant testified that although Employer sent her a training manual, it was actually drafted by Suzuki, and the training she received prior to the assignment was from either Suzuki or Apex. Claimant stated that she had performed similar services for the previous ten years as an employee of other agencies, not as an independent contractor. She also stated that she was not currently signed with any other modeling or talent agencies. Finally, Claimant testified that during the period in question, she was actively seeking full-time employment with other companies and had recently been hired by an agency as a full-time employee.
The Referee, finding that Claimant's involvement with Employer was de minimis in nature and that Claimant had no intent nor took any steps to become self-employed, found that she was not ineligible for benefits under Section 402(h) of the Law. Employer appealed to the Board, arguing, inter alia, that Claimant was self-employed and, thus, not entitled to benefits. The Board made several additional findings of fact, including that Employer did not withhold any taxes during Claimant's employment; that Claimant was free to accept or reject assignments and could work for Employer's competitors during her employment; that Employer did not exert any control over Claimant, had no personnel at the assignment, and did not provide Claimant with clothing or training for the position; that Claimant only worked one assignment for Employer; that Claimant had not signed agreements with other modeling agencies; and that Claimant continued to look for full-time employment. The Board concluded, based on those findings, that Employer met its burden of proving that Claimant was free from its direction and control. However, the Board, noting that Claimant only worked one three-day assignment for Employer and that there was no evidence of an ongoing relationship with Employer, held that Employer failed to demonstrate that Claimant was customarily engaged in an independently established business or trade, which had the effect of allowing her compensation benefits to continue until she was hired in a full-time position. This appeal by Employer followed.
This Court's review is limited to determining whether the Board's adjudication is in violation of constitutional rights, whether an error of law was committed, or whether the factual findings are supported by substantial evidence. Gusky v. Unemployment Compensation Board of Review, 51 A.3d 316, 318 n.5 (Pa. Cmwlth. 2012).
The issue on appeal is whether Claimant was an independent contractor for the purposes of Section 4(l)(2)(B) of the Law excluding her from coverage. Generally, there is a presumption in the Law that an individual receiving wages is an employee and not an independent contractor engaged in self-employment. Pasour v. Unemployment Compensation Board of Review, ___ A.3d ___ (Pa. Cmwlth., No. 522 C.D. 2012, filed October 3, 2012), slip op. at 4. However, an employer can overcome this presumption by establishing that a claimant is self-employed by proving that he or she is an independent contractor under Section 4(l)(2)(B). Id. at 4-5. The employer bears the burden of proving that a claimant is self-employed and must establish that the claimant was: (1) free from control and direction in the performance of his service; and (2) customarily engaged in an independent trade or business as to that service. Id. at 5. Unless both of those showings are made, the presumption stands that one who performs services for wages is an employee. Minelli v. Unemployment Compensation Board of Review, 39 A.3d 593, 596 (Pa. Cmwlth. 2012). Because the Board found that Claimant was free from control and direction, we only have to determine whether the Board erred in finding that Claimant was not customarily engaged in an independent trade or business.
Employer argues that the Board erred in determining that Claimant was not customarily engaged in an independent trade because, rather than utilizing the correct standard for making such a determination, the Board improperly relied on the fact that Claimant only worked one assignment for Employer and that there was no evidence suggesting an ongoing relationship with Employer. Employer contends the Board should have found that Claimant was an independent contractor and, therefore, ineligible for benefits because it established that Claimant is customarily engaged in an independent trade or business.
Employer also argues that the Board erred in failing to apply the doctrine of collateral estoppel to the present matter. Employer alleges that the Board has twice found that claimants who have contracted with Employer for its model agency services are not employees of Employer, but rather, independent contractors. This Court has held:
Collateral estoppel will apply only when the issue decided in the prior adjudication was: (1) identical with the one presented in the later action; (2) when there was a final judgment on the merits; (3) when the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication; (4) when the party against whom it is asserted has had a full and fair opportunity to litigate the issue in a prior action; and (5) when the determination in the prior proceeding was essential to the judgment. Hartman v. Unemployment Compensation Board of Review, 39 A.3d 507, 510 n.7 (Pa. Cmwlth. 2012).
However, we have repeatedly held that a claimant who is already receiving unemployment compensation benefits is not customarily engaged in a trade or business by accepting an occasional work offer on an as-needed basis. See Minelli, 39 A.3d at 598 (claimant receiving benefits not disqualified by performing 22 hours of consulting work on an "as-needed" basis over a three-day period); Silver v. Unemployment Compensation Board of Review, 34 A.3d 893, 897-98 (Pa. Cmwlth. 2011) (claimant receiving benefits not disqualified by performing consulting work as a non-agent independent contractor for a total of three hours over course of five months).
In Pasour, we denied benefits to a claimant registered with an attorney referral agency because he "held himself out as capable of performing his services for anyone who wished to avail himself of [those] services," and "was not compelled to look to only a single employer." Pasour, slip op. at 8-9. However, we distinguished that case from Minelli and Silver, explaining:
[t]he question is not, as it was in Minelli and Silver, whether the position with [employer] disqualified Claimant from receiving benefits for which he was already qualified and receiving, but whether the work Claimant performed for Client, via [employer], is sufficient to grant UC benefits in the first instance.
In this case, the testimony clearly establishes that Claimant had previously worked in this field only as an employee, not as an independent contractor. Moreover, she testified that she hoped that accepting the independent contractor position would lead to full-time employment. The fact that Claimant did not seek any additional assignments lends further support to the Board's conclusion. Essentially, Claimant never stopped seeking full-time employment and only accepted the position with Employer to "fill in" as she continued to look for a full-time position. The fact that Claimant worked as an independent contractor for one three-day assignment with Employer is not sufficient to establish that she was customarily engaged in an independently established trade or business.
Because Claimant's employment did not meet the second prong of the test to disqualify a claimant for benefits under Section 4(l)(2)(B) of the Law, the Board properly found that Claimant was not ineligible for benefits. Accordingly, the order of the Board is affirmed.
The remedy for Employer in this case is to seek relief from charges under Section 302.1 of the Law, added by the Act of June 17, 2011, P.L. 16, 43 P. S. §782.1. --------
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 7th day of December, 2012, the order of the Unemployment Compensation Board of Review, dated April 6, 2012, at No. B-533592, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge
Here, Claimant was not a party to the previous actions cited by Employer and, thus, did not have a full and fair opportunity to litigate the issue. Accordingly, Employer's argument is without merit.
Id. at 9. Because Claimant applied for and was already receiving benefits prior to accepting the position with Employer, Pasour is inapplicable. In its reply brief, Employer argues that the relevant inquiry here is not whether Claimant's work for Employer disqualifies her from receiving benefits from a former employer, but rather, whether the work she performed for Employer should be deemed an employment relationship sufficient to grant benefits. However, Employer did not raise that issue in its petition for review and, therefore, it has been waived. Pa. R.A.P. 1513(d).